Loans can cost a lot of money- but only because of the interest rates that come paired with them. Interest rates, over a long enough time period, can easily cost consumers hundreds or thousands of dollars in extra expenses. Obviously, learning to cut costs is important in staying financially sound.
Having a good credit history is going to be the best way to reduce debts via interest rates. This isn’t always possible, however, since missing even one payment on a loan can mar one’s credit rating for some time to come. If you have the resources to access your own credit report, do so and try to fix any errors before applying for a loan of any sort.
Lower interest rates can also be obtained if there is less risk to the lender. Collateral is the easiest way to reduce the risk, in which case the borrower forfeits an item of value in the case he or she can’t repay the loan back on time. This can be anything from a piece of land, a vehicle, or even prized jewelry. Whichever the case, secured loans will always be dramatically cheaper than unsecured loans on average.
It’s generally recommended that loans be obtained at a bank that one commonly does business with, for the sole reason that a close relationship with a bank will mean cheaper rates as compared to banks who aren’t familiar with the customer. Banks can also access the client’s checking account should there be a problem, which equates to less risk and less interest rates.
Conventional means of lending are starting to become a thing of the past, with new additions such as social lending becoming popular. Social lending was made available over the Internet, where anyone can borrow and lend money at will to strangers across the world. Obviously there are some risks here for fraud, but some have reported great success with the program.
If you come across an interest rate that seems a tad unfair, try looking around for a better deal. Follow the previously mentioned tips as well, and pay special attention to the tip of asking your “home” bank for their rates first- you’ll often find that they are the cheapest and most amiable for terms of agreement.
Cheap loans will come via cheap interest rates. If you are in the market for a cheap loan, be sure to consult a few financial advisers about your unique situation. Be proactive about the situation, and you will be rewarded with possibly months of less debt than what you would experience otherwise.
Author: Chris ChanningThis author has published 19 articles so far.